The Federal Open Market Committee (FOMC) held its last meeting in December 2024 and decided to keep interest rates unchanged. This decision was accompanied by a signal for several rate cuts throughout 2024. However, as we approach the next FOMC meeting, there are mixed opinions among Fed representatives regarding the appropriate course of action for interest rates.
On the eve of the upcoming FOMC meeting, three Fed representatives expressed their opinion in favor of maintaining steady interest rates. San Francisco Fed President Mary Daly stated that the current levels of unemployment and inflation do not warrant any adjustments to the monetary policy. Atlanta Fed President Raphael Bostic shared similar sentiments, expecting that the first rate cut may not occur until the third quarter. Chicago Fed President Austan Goolsbee also emphasized the importance of collecting more relevant data before making any changes.
Despite the advocacy for steady interest rates, market expectations suggest that rates will remain unchanged in January, with a 48% probability of a rate cut at the next meeting in March. Traders are closely monitoring the rhetoric accompanying the FOMC’s decision, as any indications of a possible rate cut in March could weaken the USD against major currencies.
If Fed Chairman Jerome Powell signals a possible rate cut in March, it is anticipated that the USD will weaken against major currencies. In particular, the USDJPY pair may decline to the 140.00–142.00 range by the end of the trading week.
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The FOMC’s decision to keep rates steady in December 2024 comes with a signal for potential rate cuts in 2024. While some Fed representatives advocate for maintaining steady rates, market expectations suggest a possibility of rate cuts in the coming months. Traders will closely watch the rhetoric accompanying the FOMC’s decision, particularly focusing on any indications of a rate cut in March. As we await the next FOMC meeting, Octa continues to provide its clients with valuable services and support in navigating the financial markets.
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